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In July 2016, Caltrain's Board of Directors awarded contracts to [[Balfour Beatty Construction]] and [[Stadler Rail]] to construct infrastructure for the electric trains and the electric trains themselves, respectively.<ref>{{cite press release |url=http://www.caltrain.com/about/MediaRelations/News_Archive/Caltrain_s_Board_Approves_Electrification_Design-Build_and_EMU_Contracts.html |title=Caltrain's Board Approves Electrification Design-Build and EMU Contracts |author=<!--Staff writer(s); no by-line.--> |date=7 July 2016 |publisher=Peninsula Corridor Joint Powers Board |accessdate=2 April 2017 |archiveurl=http://www.webcitation.org/6pRDhEjHi |archivedate=2 April 2017 |deadurl=no}}</ref><ref>{{cite news |url=http://www.railwayage.com/index.php/passenger/intercity/caltrain-awards-electrification-emu-contracts.html |title=Caltrain awards electrtification, EMU contracts |author=Vantuono, William C. |date=8 July 2016 |newspaper=Railway Age |accessdate=2 April 2017}}</ref> Balfour Beatty was awarded a $697 million contract, its largest contract in the United States, to electrify the line at 25kV AC, replace signaling systems, construct two traction power substations, one switching substation, and seven paralleling substations.<ref name=ProgRail-16>{{cite news |url=http://www.progressiverailroading.com/passenger_rail/news/Caltrain-inks-contracts-with-Balfour-Beatty-Stadler-for-electrification-project--49177 |title=Caltrain inks contracts with Balfour Beatty, Stadler for electrification project |author=<!--Staff writer(s); no by-line.--> |date=17 August 2016 |newspaper=Progressive Railroading |accessdate=2 April 2017}}</ref> Stadler was awarded a $551 million contract to deliver 16 "[[Stadler KISS|KISS]]" trains of 6 [[bilevel rail car|bilevel]] [[electric multiple unit]]s each, with the option to increase the order with an additional 96 cars in the future.<ref name=ProgRail-16 /><ref>{{cite news|title=For Caltrain, 16 KISSes from Stadler (but no FLIRTs)|url=http://www.railwayage.com/index.php/passenger/commuter-regional/for-caltrain-16-kisses-from-stadler-but-no-flirts.html|publisher=''[[Railway Age]]''|date=August 16, 2016|accessdate=March 29, 2017|author=Vantuono, William C.}}</ref> The contract also marks the first American design win for the Stadler KISS.<ref name=ProgRail-16 />
In April 2016, after missing the initial October 2015 deadline, Caltrain requested a third party review of the CBOSS project from the [[American Public Transportation Association]] (APTA).<ref name=APTA>{{cite report |url=http://www.caltrain.com/Assets/Caltrain+Modernization+Program/CBOSS+PTC/APTA+Peer+Review+Report.pdf |title=American Public Transportation Association Peer Review for Caltrain, San Carlos, California |author=North American Transit Services Association |date=4 July 2016 |publisher=Peninsula Corridor Joint Powers Board |accessdate=31 March 2017 |archiveurl=http://www.webcitation.org/6pOCBMZ3y |archivedate=31 March 2017 |deadurl=no}}</ref> APTA noted that Caltrain was not effectively managing the project schedule and cost because of generally poor communication between Caltrain's project management and PTG, and Caltrain's project manager did not have the technical experience or authority to resolve technical and contractual issues with PTG.<ref name=APTA /> In February 2017, Caltrain terminated its contract with PTG for failure to perform on time and budget and announced potential litigation.<ref>{{cite press release |url=http://www.caltrain.com/about/MediaRelations/news/Caltrain_Terminates_Contract_with_Parsons_Transportation_Group__PTG_.html |title=Caltrain Terminates Contract with Parsons Transportation Group (PTG) |author=<!--Staff writer(s); no by-line.--> |date=24 February 2017 |publisher=Peninsula Corridor Joint Powers Board |accessdate=25 March 2017 |archiveurl=http://www.webcitation.org/6pODay11G |archivedate=31 March 2017 |deadurl=no}}</ref> Parsons filed suit on February 22, saying delays were due to changing client requirements and circumstances beyond their control.<ref name=SJMN-170301>{{cite news |url=http://www.mercurynews.com/2017/03/01/caltrain-quietly-fires-contractor-before-testing-of-new-safety-system-is-completed/ |title=Caltrain fires contractor before testing of new safety system is completed |author=Baldassari, Erin |date=1 March 2017 |newspaper=San Jose Mercury News |accessdate=4 April 2017}}</ref> Caltrain filed suit a week later, seeking $98 million in damages; although the system has been mostly installed, testing is still incomplete.<ref name=CHNS-170306>{{cite news |url=https://www.courthousenews.com/caltrain-safety-contractor-trade-lawsuits/ |title=Caltrain, Safety Contractor Trade Lawsuits |author=Renda, Matthew |date=6 March 2017 |newspaper=Courthouse News Service |accessdate=6 April 2017}}</ref>
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Secretary Chao heeded the Republican letter's arguments, and deferred the grant in a letter written by FTA Executive Director Matthew Welbes to Caltrain which stated the FTA needed "additional time to complete review of this significant commitment of Federal resources".<ref name="contractextension"/><ref name=SMDJ-170218>{{cite news |url=http://www.smdailyjournal.com/articles/lnews/2017-02-18/electrification-funds-in-peril-federal-transit-administration-delays-647-million-caltrain-decision/1776425176103.html |title=Electrification funds in peril: Federal Transit Administration delays $647 million Caltrain decision |author=Weigel, Samantha |date=18 February 2017 |newspaper=San Mateo Daily Journal |accessdate=4 April 2017}}</ref><ref name=SFC-170217>{{cite news |url=http://www.sfgate.com/bayarea/matier-ross/article/Trump-administration-deals-a-big-setback-to-10941880.php |title=Trump administration deals a big setback to Caltrain |author1=Matier, Phil |author2=Ross, Andrew |date=17 February 2017 |newspaper=San Francisco Chronicle |accessdate=25 March 2017}}</ref><ref>{{cite news |url=http://www.fresnobee.com/news/local/article133473194.html |title=Feds delay grant approval for Bay Area rail electrification |author=Sheehan, Tim |date=17 February 2017 |newspaper=Fresno Bee |accessdate=4 April 2017}}</ref> Caltrain had expected Secretary Chao to approve the grant and sign the FFGA by March 1, which is normally a ''[[pro forma]]'' step performed after the 30-day comment period for a highly-rated project, and had already awarded construction contracts.<ref name="contractextension"/><ref name="SV">{{citeweb|url=http://www.eastbaytimes.com/2017/03/24/trump-chao-get-an-earful-on-caltrain-funds/|title=Trump, Chao get an earful on Caltrain funds from Silicon Valley leaders|publisher=''East Bay Times''|author=Richards, Gary|date=March 24, 2017|accessdate=March 29, 2017}}</ref> [[Balfour Beatty Construction]] and [[Stadler Rail]] had already begun preparations to upgrade the existing tracks and build electrical trainsets, respectively. Caltrain negotiated an emergency four-month contract extension at a potential cost of $20 million.<ref name="contractextension"/><ref name=SFC-170227>{{cite news |url=http://www.sfgate.com/bayarea/article/Caltrain-acts-to-keep-electrification-plan-alive-10964012.php |title=Caltrain acts to keep electrification plan alive |author=Cabanatuan, Michael |date=27 February 2017 |newspaper=San Francisco Chronicle |accessdate=25 March 2017}}</ref><ref name=BCNC-170227>{{cite news |url=http://www.sfgate.com/news/bayarea/article/Contractors-Agree-To-3-Month-Deadline-Extension-10963828.php |title=Contractors Agree To 3-Month Deadline Extension With Caltrain On Electrification Project |author=<!--Staff writer(s); no by-line.--> |date=27 February 2017 |newspaper=Bay City News Service |accessdate=25 March 2017}}</ref> Under the preliminary budget proposal released in mid-March 2017, the [[United States Department of Transportation]]'s Capital Investment Grant Program would be eliminated, although projects holding a completed FFGA would continue to be funded.<ref name=SFC-170317 /> Since Secretary Chao had withheld approval of the FFGA for PCEP,<ref>{{cite web |url=https://www.transit.dot.gov/funding/grant-programs/capital-investments/current-capital-investment-grant-cig-projects |title=Current Capital Investment Grant (CIG) Projects |author=<!--Staff writer(s); no by-line.--> |date=2017 |publisher=Federal Transit Administration |accessdate=4 April 2017}}</ref> the project's future was questionable.<ref name=SFC-170317 />
In response to the grant deferral, various local officials traveled to [[Washington D.C.]] in order to lobby federal officials to release the money. Editorials in local newspapers urged approval of the grant, including the ''Sacramento Bee'', who called the deferral "a petty attack";<ref>{{cite news |url=http://www.sacbee.com/opinion/editorials/article140446843.html |title=House Republicans launch a petty attack on a smart rail project |author=Editorial Board |date=24 March 2017 |newspaper=Sacramento Bee |accessdate=28 March 2017}}</ref>
==Design==
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